tag:blogger.com,1999:blog-918478938386753900.post1842781627933830455..comments2009-04-03T16:40:04.198-07:00Comments on Romania Economy Watch: Romania What Next?Unknownnoreply@blogger.comBlogger6125tag:blogger.com,1999:blog-918478938386753900.post-72735520379847540552009-04-03T16:40:00.000-07:002009-04-03T16:40:00.000-07:00Cristina,Essentially the NBR stuck to their non-st...Cristina,<BR/><BR/>Essentially the NBR stuck to their non-sterilized intervention in October for a long time.<BR/><BR/>Early January - March, they managed the exchange rate through direct intervention mostly, while RON rates returned to normal.<BR/><BR/>The FDI coverage in 2009 is not necessary good news - we should note that coverage decreased to 52%; most FDI were share capital increases and intragroup loans.Authorhttps://www.blogger.com/profile/03054407316453023415noreply@blogger.comtag:blogger.com,1999:blog-918478938386753900.post-3656513140625018452009-04-03T12:09:00.000-07:002009-04-03T12:09:00.000-07:00I've been reading your blog for a while and I find...I've been reading your blog for a while and I find it very usefull.<BR/>I am from Romania so I know a bit about this loan from IMF and EU.<BR/>The reserve requirements for euro are at a record level in Europe at 40% and the ones in RON at 18%, so there are plenty of money to credit the economy if the reserves are lowered. The IMF loan of 13 billion goes to the national bank, 5 or 6 billion finance the budget deficit and 1-2 billion come from BEI, EBRD. EBRD financed banks that were in trouble, Banca Transilvania in October and Erste in March when there was that noise about Austria's exposure. The National Bank will lower to 0% the required reserves for euros with maturities of more than 2 years starting from May (when the loan from IMF arrives). That will free 0.6 billion and will be an incentive for long term loans taken by romanian foreign owned banks. The austrian banks signed a gentlemen agreement with the romanians authorities and the IMF in Vienna to promise they will not withdraw money from Romania. This will hardly be the case when there will be enough liquidity in the market. With a rapidly correcting account deficit and an economy where constructors and importers ensured most of the "growth", banks will be very cautious with businesses. <BR/>Why IMF and not simply EU? Because in last autumn's elections most parties promissed unthinkable attrocities, like a 50% rise of the teachers wages and we have 2 more elections this year... There are plenty of measures to reduce government spending now and there will be a new tax on small businesses. Yet the government is a coalition with 70% support in the parlament that could break up and the thought of it is terrifying. <BR/>In my view the loan had to be taken for two reasons - most of the private debt that has to be paid this year in euro is scheduled in May and June and the rest in October. We have to avoid a rapid depreciattion of the currency. The second reason is that the rates at which banks lend are way higher than one year ago and the highest in Eastern Europe. The currency has been kept under control at the cost of a credit squeeze. These charts are from December http://www.bruegel.org/Public/fileDownload.php?target=/Files/media/PDF/Publications/Policy%20Briefs/pb_Avoiding-a-Euro-dividde_191208.pdf<BR/>You can tell the credit squeeze by watching the traffic in Bucharest. The worst month was January with very little traffic. <BR/>The good news is that the FDI grew by 50% compared to last year in January. In Poland it grew by 35%. Not a bad time to invest when currencies are undervalued, there is less traffic, skilled constructors are returning from Spain...<BR/><BR/>CristinaAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-918478938386753900.post-30899282134549417572009-04-02T13:31:00.000-07:002009-04-02T13:31:00.000-07:00Hi,"I think the chart about EUR/RON is wrong. "It ...Hi,<BR/><BR/>"I think the chart about EUR/RON is wrong. "<BR/><BR/>It was, thanks. Strange, it came from Yahoo Finance, but still. The ECB ones seem fine.<BR/><BR/>EdwardEdward Hughhttps://www.blogger.com/profile/10384039867580949531noreply@blogger.comtag:blogger.com,1999:blog-918478938386753900.post-9129006597496551012009-04-02T12:50:00.000-07:002009-04-02T12:50:00.000-07:00I think the chart about EUR/RON is wrong. http://w...I think the chart about EUR/RON is wrong. http://www.ecb.int/stats/exchange/eurofxref/html/eurofxref-graph-ron.en.htmlAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-918478938386753900.post-58614158624484293422009-03-30T23:09:00.000-07:002009-03-30T23:09:00.000-07:00Hello there,"I would love to better understand the...Hello there,<BR/><BR/>"I would love to better understand the uses of the recently secured IMF loan"<BR/><BR/>Well please hold on, since this post is about to grow over the next couple of days.<BR/><BR/>I don't know if I can adequately explain the loan, but I will do my best.Edward Hughhttps://www.blogger.com/profile/10384039867580949531noreply@blogger.comtag:blogger.com,1999:blog-918478938386753900.post-10578579330545791422009-03-30T20:35:00.000-07:002009-03-30T20:35:00.000-07:00I would love to better understand the uses of the ...I would love to better understand the uses of the recently secured IMF loan (I believe 20bn euros, of which quite a sizable portion will prob go towards financing the budget deficit)...Anonymousnoreply@blogger.com